Financial Trades Want More Time to Comment on Credit Card Fees

Credit union groups among those who say they were blindsided by unexpected call for comments on whether credit card late charges are reasonable.

Saying they were caught by surprise, credit union and other financial services trade groups are asking the Consumer Financial Protection Bureau (CFPB) to extend the period for public comment on credit card late fees.

“Part of the reason for this extension request is that this [solicitation for comment] is unexpected, given that action on this matter was not listed in Unified Agendas or the Spring Regulatory Agenda, published the evening before the [solicitation] was announced, and was apparently not submitted to the Office of Information and Regulatory Affairs as part of the development of that agency agenda,” the groups wrote, in a letter to the agency.

The groups requesting the extension include the Credit Union National Association, the National Association of Federally-Insured Credit Unions, the American Bankers Association and the Independent Community Bankers of America.

The CFPB has said it is examining several types of fees that financial services providers charge consumers—terming such charges “junk fees.”

On June 22, the agency took what some consider as the first step in attempting to rein in credit card late fees by issuing an Advanced Notice of Proposed Rulemaking.

Credit card issuers have immunity as long as the late fees they charge are considered reasonable; issuers are also permitted to increase their fees to adjust for inflation.

The CFPB found that the credit card market generates sizable profit on late fees, with companies charging $12 billion in such fees in 2020.

The deadline for comments on the agency’s notice is July 22.

Why Do Groups Want More Time to Respond?

The groups, in their request for an extension, wrote that the agency was reopening a rule that was issued by the Federal Reserve board before responsibility for credit card fees was transferred to the CFPB.

Together they told the CFPB that the original rule had been issued with little controversy and has continued to exist without substantial changes during the regimes of five agency leaders.

Most recently, the CFPB, under current Director Rohit Chopra, had adjusted the allowable maximum late fee to $30 for the first instance and $41 for the second late payment.

“The current rulemaking appears to question this established methodology that has been used by CFPB across administrations of both parties, raising complex issues of regulatory continuity for commenters to consider,” the financial trade groups wrote, in their letter.

They further stated the information sought in the request for comment is complex and requires significant analysis.

Much of the information has not been requested before by the CFPB, the groups said, adding that the current timeline provides only 20 working days to respond. They noted that when the original rule was issued, commenters were given 60 days to respond.

Criticism from Top House Financial Services Committee Republican

Meanwhile, the ranking Republican on the House Financial Services Committee condemned the CFPB’s decision to seek comments on late credit card fees.

“This is another attempt by the Biden Administration to force through a progressive priority that Democrats don’t have the votes to pass in Congress,” Rep. Patrick McHenry of North Carolina said.

He also accused Chopra of targeting financial institutions based on his “predetermined notion” that all fees are junk fees, stating, “This move is another step toward choking off access to credit under the guise of consumer protection, at a time when Democrat policies are making everyday essentials unaffordable.”